Posts

Top 4 Tax Deductions Claimed by Property Investors

/in , /by

It is significant to ensure that you maximize your tax deductions for your investment property every year in Australia. The higher the tax deductions will imply less tax payment to the Australian Tax Office (ATO). When you buy an investment property, you must consider a few vital questions. But, a large number of investors often take into consideration the tenanting capacity, location, and purchase price of the property. They end up overlooking depreciation for residential rental property in many cases. Depreciation has the capacity of unlocking significant cash flow potential within an investment property. It will leave you with thousands of additional Dollars every financial year.

Here are some important tax deductions that you must not ignore:

1. Capital allowance and depreciation:

These tax deductions are meant for the overall wear & tear of your property over a period of time. These tax deductions have emerged to be the biggest deductions being claimed by property investors. However, these deductions often tend to be the most missed ones. You must get in touch with a renowned quantity surveyor to discover what deductions you may claim on your property. It is because results tend to vary. You need to assess factors when you bought it, how old it is, how long you have owned it, and renovations. An expert QS will assess all this data and prepare your investment property depreciation schedule ATO.

2. Interest and fees:

If you took a bank loan for buying a rental property, you can claim deductions for interest levied on that loan amount. In case you paid $15000 interest for the financial period including $150 bank fees, you can claim the entire $15,150 as a tax deduction. If property remained tenanted briefly, your accountant can prepare a pro-rata claim for the period during which it was leased.

3. Property advertising and management fees:

It will include the fees that you paid while trying to find a tenant for your property. It may include expenses like online, print, or signage and you will be eligible to claim them against income produced by that property. Similarly, you may also claim fees, commissions, or payments that you paid to an agent for managing your property. There are several reliable property depreciation consultants available and you may seek their assistance while preparing your depreciation report.

4. Insurance:

It has emerged as one of the most significant expenditures. It is worth noting that you can claim the cost of your insurance premiums against your rental property.  And, if you need to claim a part of this expenditure as a result of a partial rental year or several properties insured together. In such a scenario, the insurance provider will offer you help with a breakdown.

Conclusion:

You may seek your accountant’s assistance to ensure you claim your tax deductions properly. He will assess whether all the expenses have been included or not and make effective use of the investment property calculator. An expert will take into consideration the repairs and maintenance work as well. You need to undertake these works to repair a defect or to fix deterioration to the property. These tax deductions are claimed by landlords every year in Australia.

Getting Smart about Tax Depreciation

/in , /by

It is vital to claim depreciation as it is one of the most important tax benefits that you can avail. However, several property owners are not aware of this benefit. You should never overlook depreciation for tax purposes.

Depreciation can be defined as a non-cash deduction. You do not have to invest even a single penny to claim it. As any property ages, it begins to witness some wear and tear. The Australian Taxation Office (ATO) does not bar investors from claiming rental and investment property depreciation. It is interesting to note that the ATO has recognised over 1500 items as depreciable assets. You may seek the services of an expert Quantity Surveyor to claim these deductions.

Given below are some key points that you must be aware of while claiming tax depreciation:

Plants and equipment:

The ATO has identified and specified that plant and equipment undergo wear and tear at a relatively fast rate. As a result of this, these items may need to be replaced a little earlier than others. Plant and equipment may include the loose assets or control panels for automated systems in the building. These items include carpets, ovens, blinds, cooktops, AC systems, door closer, garage door motors, and freestanding furniture among others. If you are still facing some confusion, get the Deppro contact number and eliminate all your doubts.

Capital works allowance:

These are based on the past construction cost of the investment property. You will be eligible to claim capital allowances on your actual residential property where it was built after September 15, 1987. It is important to note, you can claim any qualifying renovation or developments completed either by you or the earlier owner. For instance, if you constructed your property in the year 1996, you can assess the cost to construct the property at that time and you will be able to claim 2.5 percent of the value each financial year. The depreciable items are driveway fences, sinks, basins, baths, garages, door & window fittings, etc.  You may also like to read helpful Deppro reviews to clear your doubts.

Can you claim depreciation if it was built before 1987?

To be eligible for depreciation deductions, the building does not have to be new. New and old residential and investment properties will attract depreciation deductions alike.

Depreciation schedule:

You must be aware of depreciation schedules and how they may be able to help you to save money. Any building qualified to claim building write-off allowance has a maximum life of 40 years from the date when construction was finalised. In other words, the owner will be eligible to claim a maximum of 40 years of depreciation on a new building.

Conclusion:

You must prepare your house depreciation report effectively to minimise your tax liabilities. According to research, 15 percent to 35 percent of the construction cost of a residential property is manufactured from plant & equipment items. You should maximise their value in order to maximise your depreciation claim. Your depreciation schedule will outline the specific deductions available on a particular property; the details will come handy for the property investor while preparing a tax return report.

Everything You Need to Know About Property Depreciation

/in /by

Property investors receive many taxation advantages in Australia. And, this is the reason why they prefer to make their investment in properties all across the country. But, sometimes investors fail to file the Australian tax return and subsequently miss out on the benefits of depreciation deductions. A large number of investors are aware of the various claims available to them for expenses. The expenses may include loans’ interest, council rates, property management fees, repairs and maintenance costs, among others.

Given below are some vital details about property depreciation that you should be aware of:

1. Property depreciation:

When the building begins to age, its shape and the assets inside it tend to wear out. These things depreciate over a period of time. It is worth noting that the Australian Taxation Office or ATO has permitted income-generating properties’ owners to claim depreciation as a tax deduction. Depreciation deduction can be divided into two separate categories. It includes division 43 capital works allowance and division 40 plant and equipment depreciation. It will help in preparing a property depreciation schedule.

2. Significance of capital works allowance:

It pertains to the claims for the wear and tear that takes place to the building structure and fixed objects. Capital work will contain objects such as roofs, walls, doors, kitchen cupboards, and toilet bowls, among others. Any residential building where construction started after September 15, 1987, will make its owner eligible for capital works deductions. The deduction can be sought for up to forty years at the rate of 2.5% every year. Owners of buildings built before 1987 should discover what deductions will remain available as these buildings underwent renovations. The renovations will lead to capital works deductions. Rental home returns have emerged to be highly profitable.

3. Plant and equipment depreciation:

Plant and equipment depreciation are eligible to be claimed for conveniently removable fixtures and fittings available inside the property. There are over 6000 various depreciable assets identified by ATO. It includes carpets, blinds, air conditioners, and smoke alarms among others. Each plant and equipment asset is allocated an individual effective lifespan and depreciation rate. As per the existing legislation, second-hand property owners who exchanged contracts after May 9, 2017, cannot claim deductions for earlier used plant and equipment assets. And, investors who bought new residential and highly renovated properties, commercial real estate will be able to claim depreciation deductions.

4. Importance of claiming depreciation:

It is significant for the owner of the residential property to claim a depreciation deduction. It will help in making a huge difference in an investors’ cash flow. We have discovered that a residential client’s average first-year claim was approximately $9000.

Conclusion:

You may claim the depreciation of your investment property against taxable income. And, seasoned property investors are aware of the benefits of depreciation residential rental property. Some property investors will even take depreciation into consideration prior to buying their next investment property. Anyone buying a property for the purpose of generating income will remain eligible to depreciate buildings and assets inside it against assessable income. It will help to lessen their tax burden and maximize the gains.

How is Depreciation Applied Following Natural Disasters?

/in , , /by

Irrespective of the country you are in, you would often hear of the havoc that natural disasters can cause. Whether it’s the bushfires in NSW or Queensland, or the Victorian floods this year, natural disasters happen with frightening regularity. While the loss of human life in such disasters is an irreparable loss, there are other ways that the victims suffer. For example, the destruction and damage of property causes losses of millions of dollars every year, for homes, offices, and commercial property. The owners of these properties find themselves in a very difficult situation. Some need to be rebuilt from scratch. Others are slightly luckier, and they can get by with replacing most of their assets.

This rebuilding and renovating after a natural disaster does often result in an almost new structure. As far as the property valuation goes, it impacts the tax payable as well. This is because the property attracts different depreciation rules after repairs following a natural disaster. Because of the different depreciation amounts and percentages, the tax-deductible due to depreciation also changes. After suffering such loss of property due to a natural disaster, the least you can do is to ensure that you don’t pay more tax than you ought to.

A Few Definitions

Before you get into the calculation of depreciation for tax purposes, it’s best to understand a few key terms that would often be used. When you need to undertake minor work in order to return your house to its earlier condition, you are said to be undertaking repairs. Sometimes, some fittings or fixtures of your house are spoilt, broken, or damaged after the natural disaster strikes. In that case, they would need to be replaced by new assets. When you undertake some works to improve the look, utility, or specifications/dimensions of some assets without replacing them, you are said to have improved or upgraded it. If you are working on your tax-related depreciation calculations yourself, it is imperative that you know and understand these terms – even if you are employing the services of a quantity surveyor, you should still be aware.

How to Calculate Depreciation?

If you wish to make an accurate property depreciation report, you need to understand the different calculations yourself. First, if it is simple repairs, then you need to immediately deduct those expenses if you do not have insurance coverage. If you have insurance, you need to also declare the insurance income you received. If your work is a little more detailed and you need to replace things, then you must first find out the residual value of that replaced asset – this is only if you do not have insurance. If you do, then before claiming depreciation on property, you must adjust the values of Individual Depreciation Assets and Capital Allowance. The flow of calculation would be similar when you are improving or upgrading your assets.

Conclusion:

There is no denying the fact that if your property is hit by a natural disaster, there is little you can do, except wait till it passes. But later, you can always make an accurate assessment of your depreciation to minimise your tax commitment.

Getting Help with Investment Property Depreciation

/in , /by

Quantity surveyors play a crucial role while dealing with investment property depreciation schedule. Many people may find it confusing when they have to deal with something that includes the term depreciation. They assume that depreciation means a decline in value so they link it to something very negative. But, when it comes to an investment property, depreciation will actually be in your favour as long as you tread the path cautiously. So, let’s just say, you have an old property in your possession and you are exploring ways to make optimum use of it. In such a scenario, you may either repair or renovate the old property or just resell it. Here you must know that renovating your old property can yield you great benefit as a result of tax building depreciation.

Here are some important factors:

1) Many people sell their used property and remain unaware that they can apply for property tax depreciation against taxable income. The tax claim can be made in two ways. First one is plant and equipment. It covers taxable objects used inside the property. These objects may include air conditioner, laundry machine or any other machinery. However, deductions for the plant and equipment items will be applicable if you purchased the property before May 9, 2017. Tax claims can be made through building allowance. It covers all the construction expenditure for those properties constructed before 1985.

2) In order to apply for tax entitlements, you must hire a quantity surveyor who will carry out all the work for you. The work of a quantity surveyor mainly includes organising the depreciation schedule which can validate the tax deductions. The expert quantity surveyor will prepare the property tax depreciation schedule. As you cannot avoid payment of repairs and renovations on an old property, you can get most of the cost back by paying less tax.

3) A quantity surveyor will help you in evaluating your property and prepare a depreciation report. The report will be presented at the tax office for reference. The expert quantity surveyor will make a big difference in how big or small tax benefit you will receive. If the surveyor prepares a comprehensive report covering all minute details, you may receive a great tax benefit. The expert quantity surveyor can effectively organise a depreciation schedule for investment property.

4) The quantity surveyor will carry out a physical inspection of the property. It will allow him to record all of the legal entitlements in the report. They ensure that the tax depreciation report includes all depreciable assets so that they cost it accurately.

Conclusion:

So, it is important to hire an expert quantity surveyor who has the right legal information and technical expertise. All Quantity Surveyors should follow the tax laws and other ATO guidelines. You can then work with the surveyor on the depreciation schedule and report. The expert surveyors will assess the depreciation rates for all of the assets. It will help them determine if you are permitted to a write-off rate. So hire the best quantity surveyor who can estimate tax returns for you from Deppro, Australia.

What You Should Know about Property Depreciation

/in , , /by

Most of us begin our real estate affairs without any knowledge of property depreciation. However, knowledge about the term may prove advantageous in the long run, particularly if you have owned a property for a long period of time. In short, investment property depreciation can decrease taxes that you may have to pay as tax time arrives. You can also claim depreciation tax on various other things as well which may include the vehicle that you have been using for generating income. Similarly, you can also seek benefit from real estate property tax depreciation. Your sound knowledge on depreciation for tax purposes will prove beneficial for you.

Here are some important things you should know about property depreciation:

1. Is your property too old for claiming depreciation?

If your residential property was constructed after July 1985, you can still claim building allowance as well as plant and equipment. However, if construction began before the aforementioned date, you will only be able to claim depreciation on plant and equipment.

2. Should your accountant prepare this report?

In case your residential property was constructed after 1985, your accountant will not be allowed to assess construction costs. Neither the real estate agents nor the solicitors can estimate the construction cost. You should be aware of the important details of the tax depreciation report and tax ruling 97/25 issued by ATO.

3. How can you claim depreciation for your property?

It is essential to obtain a property depreciation report. A qualified quantity surveyor will help you secure that report. The surveyor is an expert in estimating the cost of any property. They are qualified enough to prepare a depreciation report even if construction costs are not known.

4. Will you require scrutinizing your property?

It is essential to obtain site inspections which satisfy ATO requirements. The expert quantity surveyor will make sure that all of the depreciable objects are calculated along with their images. It will ensure that you do not skip any deductions. In the scenario of an audit, the documentation will prove useful and can be used as evidence. Quantity surveyors communicate directly with the property manager or tenant so that least interruption is caused to the tenant. They have expertise in preparing tax depreciation schedules and other essential reports to keep you at ease.

5. Will you be able to claim depreciation if the property is renovated?

Yes, however, you must know exactly how much you spent on renovations. In case the earlier owner carried out the renovations, you can still claim depreciation. If the cost of renovation is not known, the expert quantity surveyor will make the estimate.

Final Thoughts:

You can find some of the best-qualified quantity surveyors in Australia at Deppro. They will offer their services at cost effective prices and will not create a hole in your pocket. You can also find a Deppro contact number online. Get in Touch with the depreciation specialists today.

4 Facts every Property Investor Needs to know about Claiming Depreciation on their Rental Property

/in /by

When it comes to depreciation schedules for your rental property, it is quite important to know all the necessary facts included within the same. Given below are four important facts to understand tax depreciation:

Fact 1: Depreciation is known to be the largest set of deduction, which is available for any property investor

To start off with the first fact, it is really important to know that tax depreciation is known as one of the largest set of deductions. Depreciation lies within the range of $2,500 – $5,000 for the existing house whereas the brand new one averages around $10,000 – $13,000 per unit. It is typically done for the first complete year for standardised residential houses or properties.

Let’s Take an Example to Understand Deppro Tax Depreciation

John, a senior officer of the IT department happens to purchase a unit in his city to make his first investment. That very unit was built around 10 years ago, as a matter of fact John bought it for around $540,000 in the month of April 2017. The yearly income of John is $75,000.

Every year John’s unit goes through the aging process, along with all the other common areas that go in the unit development. As John bought and rented his very property before the 9th of May, 2017, he can raise a claim for the act of depreciation of his building. In addition to that, he can also raise a claim of Deppro tax depreciation for the entire assets included, as a matter of tax deduction.

Fact 2: New properties happen to generate better depreciation deductions for all the investors

When investors purchase brand new properties for investment purposes, it ends up generating greater depreciation deductions. It can be the very case for two vital reasons:

When it comes to constructing today’s properties, it costs an individual more than it was back in the day. A very important way to calculate depreciation is by calculating a mere percentage of the whole construction cost that will be deducted each year. When all the equipment and plant assets are new, it initially ensures that they are eligible enough for the annual depreciation deductions.

Fact 3: It is been said that 90% of properties that are old qualify for deductions in the shape of depreciation

It is quite vital to understand that new properties happen to generate one of the best depreciation deductions, which many of the investors fail to realise. To understand it in a much easier way is when a property is built 40 years ago, it is understood that there will not be any value left in order to depreciate and later claim.

If one specific property was bought before the 9th of May 2017, the assets that come within that very property will also qualify or be eligible for depreciation deductions.

Fact 4: Benefits of tax depreciation, when claimed, outweigh the impact made on CGT

Some of the investors are only concerned about the claiming of depreciation now, and on the contrary think that they are only increasing their Capital Gains Tax, which will be made payable if they happen to sell off their property.

Having said in the tax depreciation report, that only the depreciation, which is claimed for Buildings and Structures are deducted from the cost of your base. The Deppro tax depreciation cannot be claimed on Division 40 – assets such as stove, hot water system, blinds, and air conditioner.

Properties rented or bought after 7.30pm in the month of May 2017 do not make annual claims for the act tax depreciation report of depreciation on Division 40 assets present in their property. However, when the property gets sold out, the value accumulated on that depreciation is claimable as the expense, which further goes on to reduce profit on its sale as well as the potential payable CGT.

Know the Status of Depreciation Deductions on your Property

Mentioned above are some of the most important facts that investors need to keep in mind before claiming depreciation on their rental property. An easy way to do so would be to use Deppro tax depreciation for further assistance.

Depreciation on investment property makes life easier

/in , , , /by

Investors and business owners order depreciation on investment property so they can efficiently handle expenses. Many investors, though, don’t know about depreciation and how it can make their lives easier. It absolutely pays off financially, and there’s other perks as well.

Most people don’t think about taxes everyday, but the professionals do. Ordering a depreciation report on investment property removes a lot of guesswork and takes the pressure off their minds. Thanks to the experts, they can make accurate deductions for the time they own the properties in their portfolios. Deppro’s reports last forty years, long enough to hold the property and sell it on.

Access to a depreciation schedule is easy for any investor, whether they’re just starting out or played the game for a while. Companies like Deppro exist to help people at any stage of their investment game. They’ll explain how the report works, how items are categorised, and what to do after the clients get the depreciation schedule in their hands. This makes life easier, especially for newcomers, because the experts are taking care of everything.

When you ask the experts for help with depreciation for investment property, you’re also getting an education. Deppro guides their clients through the process of ordering the report and how to use it to maximise deductions. You’ll also learn what a quantity surveyor does, and what items will fall under ‘capital works’ if you ever renovate your property.

When you get expert help for depreciation on investment property you’re making less work for yourself. You get a depreciation schedule that lasts for decades and saves you worrying about accurate numbers. The report, and the expert help that comes with it, is accessible to anyone at any stage of building a portfolio. You’ll also learn a few things along the way, like how to use the report for taxes, and whether you can claim the new carpet for the office as a deductible expense (yes, you can).

How to get on top of property depreciation

/in , , , /by

Property depreciation is a crucial part of managing your taxes and rental property. If you don’t do it, you’re missing out on cash – lots of it. So how does one get on top of their tax depreciation?

 

First thing’s first: get an expert. Companies like Deppro prepare depreciation reports/schedules that are ATO compliant. Their staff evaluate items for their lifetime value and prepare the report, detailing how they will decrease in value over time. Things in and around the home fall into two categories: plant and equipment, or capital works

 

Second, get the expert to come as soon as you settle with the real estate agent. Quantity surveyors work best when they see the items in the condition you bought them. If the previous owner has done renovations, you can claim deductions on their work! The ATO will only accept a property depreciation report created by a quantity surveyor, not an accountant. This is because they’re the most qualified to do it. You wouldn’t expect someone who estimates material costs for a living to write your tax return.

 

That said, the third step is to get your accountant on your side. They help you with your tax return every year, making sure you’re not missing anything you’re eligible to claim. The accountant will treat the property and depreciable items as another asset to claim. They’ll need the property depreciation schedule to properly write out the returns over the years.

 

Another helpful way to get on top of property depreciation is to make  sure you’re buying a property that will pay for itself over the years. A house or apartment that’s recently renovated and meets the criteria to generate high rental income is ideal.

 

Property depreciation is difficult to wrap your head around. To get on top of it, it’s absolutely necessary to call in experts like Deppro not long after your settlement. When you’ve got the depreciation schedule in hand, you’re set for life, or at least the next forty years.